Rare Disease Therapeutics Developers End Difficult Year for Financings and Deals

Rare disease focused therapeutics developers ended 2023 trailing the previous year in all categories of dealmaking and financing with venture investment being the one spot that remained on par with 2022, according to data from Dealforma and Global Genes.

Venture investors poured $5.1 billion into privately held precision genetic medicine focused biotechs in 2023 with 19 of them raising $100 million or more in private capital rounds, including $400 million raised in a series D financing by ElevateBio and $300 million in a series A round raised by Renagade Therapeutics. In December, Tome Therapeutics closed a $118 million series B financing to advance its gene editing platform PGI, or programmable genomic integration, which enables the insertion of any DNA sequence, of any size, into any programmed genomic location.

At the same time, many public companies faced a difficult capital market that forced them to realign their priorities, delay or stop early-stage research and focus on near term milestones, and lay off staff in order to extend their cash runways. Seventy companies in 2023 announced staff reductions or plans to close shop or sell assets, according to data from Global Genes and Fierce Biotech, include some that did it as a “defense reduction.”

IPOs were almost non-existent among rare disease focused companies, with only two of them completing initial public offerings during the year. While all therapeutics public equity and debt excluding IQOs surged in 2023 to $72.7 billion, $41.6 billion came from Big Pharma convertible debt, including $31 billion raised by Pfizer to finance its acquisition of Seagen.

In December, rare cancer biotech SpringWorks Therapeutics raised $275 million through a public offering one week after receiving U.S. Food and Drug Administration approval to market its desmoid tumor therapeutic Ogsiveo.

Rare disease focused dealmaking also trailed in 2023 compared to 2022, down 25 percent for disclosed partnering total potential deal values and down 44 percent for M&A total potential deal values. Rare disease focused partnering in 2023 leaned heavily toward genetic medicine platforms and candidates, including gene and cell therapies and gene editing technologies. In the biggest deal of the year, Bristol Myers Squibb expanded its collaboration with Evotec to develop cell therapies for neurodegenerative diseases, paying $50 million upfront in a deal valued at up to $4 billion.

Life Edit granted Novo Nordisk exclusive, worldwide rights to develop and commercialize up to seven gene editing therapies using Life Edit’s gene editing technologies for the treatment of rare genetic diseases including cardiometabolic disorders for $220 million in upfront equity and cash, in a deal valued at up to $2.4 billion.

While M&A surged in 2023 for all therapeutics companies, there were only ten acquisitions for rare disease focused companies valued at $1 billion or above. The largest deal, Biogen’s acquisition of Reata Pharmaceuticals, was valued at $7.3 billion.

In December, AstraZeneca said it would acquire Gracell Biotechnologies for its rare cancer candidates. AstraZeneca paid Gracell shareholders approximately $1 billion upfront at a 62 percent premium and who are also eligible for up to $200 million in contingent value rights upon reaching regulatory milestones.